Banks fill in economy-forced training gaps

Teaching budgets increase as books improve

The men aren't strangers, but they pretend to be this February morning. They shake hands, introduce themselves and the mock consultation begins.
Justin Flowers asks his “client” — KeyBank branch manager John D. Steinbrenner — what his financial goals are. Mr. Steinbrenner plays the slightly hesitant customer while Mr. Flowers covers the bases, reviewing the ways in which the client could allocate his assets.
When the role-playing is over, Mr. Flowers immediately inquires: What would Mr. Steinbrenner, a banker with more than a dozen years in the business, have done differently? Mr. Steinbrenner suggests only a minor change.
Not every novice banker is mentored as Mr. Flowers has been through the Key Community Bank Management Associate Program. His is the second class to undergo the nearly year-long training, which was reinstated in 2009 after an eight-year hiatus. The renewed version is more hands-on, and its ultimate aim is to grow personal bankers and set them on a path to branch management.
As balance sheets and the economy improve, banks aren't just reinvesting in lending — they're reinvesting in their people, too.
Some observers say a dearth of bank training over the last decade has created a scarcity of skilled people.
Paying people to train becomes less attractive in lean financial times, said Lisa Oliver, president of KeyBank's Cleveland district. Ultimately, the in-house training programs Ms. Oliver said were “ripe” with budding bankers in the 1970s and '80s faded in number. So did the number of well-trained personnel.
“There weren't new crops of bankers moving to Cleveland,” Ms. Oliver said. “There was a fairly finite group (here).”
Training programs, she noted, are one way to create a sustainable flow of people with know-how.
“We need to steal from each other or we need to grow them,” Ms. Oliver said.
KeyBank's management associate program, in which Mr. Flowers is involved, entrenches novice bankers in varied roles to teach them the ropes — products and customer service, for example — and pays them full-time salaries. Mentors also are provided. Six are training in Cleveland, with a total of 31 enrolled across four states in which the Cleveland-based bank operates.

Other banks jump in

Thomas J. Fraser, executive vice president and chief lending officer for First Federal of Lakewood, agreed that bank training waned as the industry became more focused earlier this millennium on booking loans than developing skills. Some of the lack of training, Mr. Fraser said, is evident in the loans that were made that can't be supported in today's economic environment.
“I think the industry as a whole has moved back toward making sure everyone is current on the best lending practices and the best ways to service customers,” Mr. Fraser said.
First Federal of Lakewood increased its training budget probably 40% in 2010 over 2009, and a similar increase is planned this year, too, Mr. Fraser said. It has ramped up both sales and credit skills training.
To the southeast, Valley Savings Bank in Cuyahoga Falls last October began its “Valley Savings University,” an in-house training program that takes place outside bank hours.
All 32 employees are paid to undergo the training — something president and chief operating officer Ann H. Durr said was motivated by increased compliance demands and newly added products. Such internal training is “fairly unique” for institutions of Valley Savings' size (roughly $105 million in total assets), Ms. Durr said. She's confident it will increase employee confidence and productivity.
The training trend extends beyond Northeast Ohio: Both the Ohio Bankers League and the American Bankers Association have recorded modest growth since mid-2010 in registrations for the training programs they offer.

Motivation to train

Many banks are increasing training for lending personnel because there will be more creditworthy borrowers as the economy improves, said James Thurston, spokesman for the Ohio Bankers League. Mr. Thurston said the league is debuting this year 11 training programs focused on commercial lending.
First Federal of Lakewood expects its educational efforts to pay off in increased revenues, loan volumes and performing loans, all of which already are up, Mr. Fraser said. He believes the enhanced training also will result in lower credit losses and costs.
At Charter One Bank, which has 115 Northeast Ohio branches, business banking specialists are undergoing or already have completed an advanced certification, said Maria Tedesco, director of business banking. Both those specialists and branch managers are taking a new, three-day program geared toward teaching them to better assist small businesses in managing cash, among other things.
“What I want to see is growth in our lending, in our deposits and our cross-sells of ancillary services to customers,” Ms. Tedesco said. “That's when I know when we're having more robust relationships, that this is paying off.”
Another reason for the growth in training: Today's bankers are recognizing there's a need to develop the next generation of leadership as baby boomers who waited to retire in light of the recession begin doing so, said James G. Edrington, senior vice president within the American Bankers Association's professional development group.
Mr. Flowers, a May 2010 Cleveland State University grad who worked as a part-time teller for KeyBank before beginning its management associate program in June, cites many positives from his training. Among them are meeting senior leadership and gaining a better grasp of the complexity of the profession.
“I think with banks like Key looking to reinvest in people, ultimately, you're giving people mobility (to go) up, down, horizontal, wherever their passions are,” Mr. Flowers said.